Friday, October 28, 2005

I'm addressing the claim that IP deprives people of certain aspects of their traditional property, and that this is somehow undesirable in principle. In the previous post I made two objections; this is my third.

What is the value of what is taken away by IP? Consider copyright. The copyright of a new book takes away my ability to write a particular sequence of words. But if the book had not been written, there is approximately zero chance that I would ever have even tried to write that particular sequence of words. I could never have written anything like Memoirs of a Geisha, for instance. The possibility of writing that word sequence is available to me precisely because the copyright-holder went to the trouble of creating it. What I’ve been deprived of had an ex ante value of just about nothing.

In other cases, there’s a better argument that I’ve been deprived of something. If someone writes a song, it’s not unreasonable to think someone else might have independently written another song with an identical sequence of six consecutive notes (which, I seem to recall, is the legal standard for infringement). If someone invents the internal combustion engine, it’s not unlikely that someone else could independently come up with the same invention. And indeed, patent history is filled with inventors who came in second-place in the patent race. So at least in many cases, IP does deprive others of something they might have had. But my point is not that IP deprives others of literally nothing, but that what we’re deprived of need not be large. We are, for the most part, sacrificing aspects of our property that we didn’t yet know were possible.

A reasonable response to this line of reasoning is that some books/songs/inventions would have been created without the inducement of copyright or patent. If so, then those ideas would have been freely available to all owners of material property. If Bruce Springsteen had written “Born in the U.S.A.” without a copyright, then all of us would be able to sing it anytime we wanted (not that we’d want to). So the creation of patents and copyrights actually does deprive owners of material property of something -- the ability to use their property to instantiate ideas that would have been public anyway.

This argument is correct but proves too much: If it’s an argument against IP, it’s also an argument against many traditional forms of property. What if, for example, we didn’t have private property in apple orchards? Then presumably not as many apples would be produced, because those who planted and maintained them would know that passersby could claim as much of the fruit as they wanted. But some apples would nevertheless be produced. There would still be apple trees, and their fruit would be freely available. The creation of private property in apple orchards would allow some of the “free” apple trees to be fenced in, and consumers would have to pay for the produce. Thus, the creation of private property in apple orchards deprives consumers of something they had before: the ability to eat a certain number of free apples.

So why have private property in apple orchards? Because it gives people an incentive to plant and cultivate more apple orchards, making more apples available to the consuming public. As a side effect, though, it means consumers have to pay more for those apples that would have been grown without the incentives created by private property. The apples-that-would-have-been-grown-anyway are closely analogous to the songs-that-would-have-been-written-anyway. The initial creation of a property regime in some activity (apple growing, song writing) means depriving people of some stuff they would have had for free, or at lower cost, in a different property regime.

The apple orchard example is far from fanciful, because there are material assets that have not yet been fully privatized. Ocean fisheries are the most obvious example. Privatization of the ocean, were it technically feasible, would align incentives in a desirable way, but it would also deprive some people of the ability to catch and consume fish without others' consent as they can under the status quo. The initial establishment of private property rights in any domain will always deprive someone of something.

The argument in favor of establishing the new property regime depends, then, on the incentive-based benefits and costs of doing so. An opponent of IP might argue that the benefits are too low and the costs too high in the case of IP. Perhaps so. But this response implicitly concedes the argument that I’m making: we ought not dismiss IP simply on grounds that it infringes other, more traditional property rights. The economic arguments are the crux of the matter.

I’m happier with the prohibition on sampling than with the 6-note rule.

If we’re interested in minimizing the “damage” that IP rules do in limiting the options of those who don’t hold copyright, then in the case of songwriting, a de minimus standard of 6 notes is more restrictive than a rule against sampling of any kind. There is some (large, but combinatorially identifiable) fixed number of 6-note sequences, whereas the number of potential waveforms to sample is infinite. So a prohibition on sampling takes away infinitely fewer options than would rigorous enforcement of the 6 note rule.

(It’s true that the number of waveforms distinguishable to the human ear is not infinite, but relative to the number of six note sequences, it might as well be.)

You've equated physical property with ideas. That isn't surprising; it's a fundamental miscue coming from the term "intellectual property."

But that term is more than misleading. For example, you talk about apple orchards as private property. Have you ever heard of "private intellectual property"? It doesn't exist. The closest we have to private intellectual property is a secret. And even then, it can't be held exclusively, as physical property can, since someone else can come along and have the same idea independently.

A better term is "intellectual monopoly". That is what we are really talking about when we talk about patents. And this brings us back to your conclusion, that "economic arguments are the crux of the matter."

So the task for you now is to justify monopoly power over ideas.

It probably also serves the debate to differentiate between copyright and patents (and trademark) instead of lumping them altogether under "IP" -- the differences are large.